How can your credit card affect your credit score?

A credit card is a type of revolving credit. This means you can borrow money up to a maximum credit limit, pay it back over time, and then borrow again as needed.

Credit cards don't usually have a set repayment schedule — you can pay off some or all of your balance whenever you want to, subject to minimum repayments.

Will credit cards show on my credit report?

Your credit card will appear on the debt section of your credit report.

Lenders will be able to see the following information:

• Your credit limit
• Your current balance (at the point in time when the information is sent to the credit reference agency)

Simply having a credit card is unlikely to affect your credit score significantly. If you have a credit card but don't spend on it, it will appear on your credit file as a balance of zero.

Does applying for a credit card affect your credit score?

Credit card applications could affect your credit score.

When you make an application, the lender will look at your credit history to assess whether you will be a reliable borrower or not. The lender will usually carry out a hard credit check which will be visible on your credit report.

A single hard credit check won't make a significant difference to your credit score, but multiple hard credit checks in a short amount of time could mean your score goes down.

Before applying, it's worth using a soft search eligibility checker — like Ocean's Quick Check — to see your chances without leaving a mark on your credit file.

Your credit card credit limit

When you take out a credit card, the provider will give you a credit limit. This is the maximum you can owe on the card at any one time.

To boost your credit score, you should aim to have a manageable credit limit but only use a small proportion of it.

Does increasing your credit limit affect your credit score?

It's a common misconception that increasing your credit limit will damage your credit score. In fact, the opposite is often true.

If you increase your credit limit but keep your spending low, it looks like you're using less credit as a proportion of your total spending. This makes you appear less risky to lenders.

Minimum payments explained

The minimum payment on your credit card is the lowest amount you are required to pay towards your debt each month.

The figure will be calculated monthly based on your credit card balance and will be shown on your statement alongside a due date.

Not paying at least the minimum payment each month will result in your credit score going down.

How a credit card could boost your credit score

If you have never borrowed money before, responsible use of a credit card helps you build a borrowing history. This can increase your chances of being accepted for credit — and being offered the best deals — in the future.

Responsible use means:

• Staying within your credit limit
• Making regular payments to reduce or clear your debt
• Paying at least the minimum amount due each month
• Not having a constant high balance on your card

Whenever possible, you should pay off your entire balance each month. Not only will this improve your credit score, but it will also mean you don't pay any interest on purchases.

💡A useful tip: your credit card provider typically reports your balance to the credit reference agencies once a month. If you pay your balance before that reporting date — even if you plan to pay in full at the end of the month — your utilisation snapshot will look lower to lenders. Checking your statement date and making mid-month payments can make a meaningful difference.

You can track how your credit card use is affecting your Equifax credit score for free through CredAbility — it's updated regularly so you can see the impact of your habits over time.

Does paying off a credit card help your credit score?

Yes — paying off your credit card balance is one of the most effective things you can do to improve your credit score.

When you pay off your balance, your credit utilisation drops. Since utilisation is one of the biggest factors in credit scoring, a lower balance can lead to a meaningful score improvement — especially if you were previously using a high proportion of your limit.

The closer you were to your credit limit, the bigger the boost you're likely to see once the lower balance is reported to the credit reference agencies. You don't need to carry a balance to build credit — paying in full each month is the best approach for both your score and your finances.

Credit cards and your credit mix

Having a credit card will affect your credit mix and credit utilisation.

Your credit mix might be made up of secured lending (i.e. mortgage) and unsecured lending (i.e. credit cards and overdrafts). Having a range of credit accounts shows you can manage different types of borrowing effectively.

Minimal spending on your credit card could lower your credit utilisation ratio, which can boost your credit score. Your credit utilisation ratio is the proportion of your total available credit you are currently using.

Does closing a credit card affect your credit score?

Closing a credit card can cause a temporary dip in your credit score for two main reasons.

First, it reduces your total available credit. If you still have balances on other cards, your credit utilisation ratio will increase — which can negatively affect your score. For example, if you owe £500 across cards with a combined limit of £2,000 and you close a card with a £500 limit, your utilisation jumps from 25% to 33%.

Second, closing a long-standing account shortens your credit history. Lenders value older accounts as they provide evidence of responsible borrowing over time. Closing your oldest card can therefore lower the average age of your accounts.

If you want to stop using a card but limit the impact on your score, consider keeping the account open with a zero balance rather than closing it outright.

How a credit card could harm your credit score

To protect your credit score, it's important to use credit cards carefully.

The following actions could cause your score to go down:

• Going over your credit limit
• Missing a minimum monthly payment
• A constant high debt balance
• Making multiple credit card applications in a short space of time

If you're not sure which card is right for your situation, our eligibility checker shows you which cards you're likely to be accepted for in 60 seconds — without affecting your credit score.